Weekly Market Performance — January 16, 2026

Markets Blog

David Matzko, LPL Research

LPL Research provides its Weekly Market Performance for the week of January 12, 2026. Stocks ended slightly lower this week as investors digested an array of headlines ranging from fresh earnings reports, geopolitical developments, rotation dynamics, and remarks from central bank officials. Big tech strength in the latter half of the week helped cap losses following strong quarterly results from one of Asia’s most valuable companies, Taiwan Semiconductor (TSM). European and Asian equities moved higher over the last five days, while Treasuries and oil prices held on to gains but finished well off intra-week highs. Also, in commodities and currencies, silver continued to outshine gold, while the U.S. dollar strengthened.

Stock Index Performance

U.S. and International Equities

U.S. Equities: Markets faced a full slate of moving pieces this week, leading U.S. stocks to post their first back-to-back losses of the new year and a slightly lower weekly result for major averages. Although small caps were a bright spot, posting a weekly gain and outperforming the S&P 500 for 11 straight sessions on Friday, besting its prior record of nine straight days in 1990. The week kicked off with an early-morning blow to risk appetite after Federal Reserve (Fed) Chair Jerome Powell confirmed that the Fed had been served subpoenas from the Justice Department over renovations at its headquarters, but stocks ultimately posted a cautious daily gain as buyers waded back into big tech names. Nonetheless, the next two days were characterized by the continuation of recent rotation dynamics away from tech toward cyclicals, as well as lingering geopolitical concerns following reports that some personnel were advised to leave a U.S. air base in Qatar, and President Trump briefly considering a strike on Iran. Weekly losses were capped, however, by a revival around the longevity of the artificial intelligence (AI) trade after strong quarterly results, sales forecasts, and spending plans from TSM on Thursday. Also among the flurry of headlines were relatively uneventful economic data, mixed Fedspeak, and no Supreme Court tariff ruling.

Simultaneously, early-season earnings reports began to trickle in. Some of corporate America’s biggest financial institutions marked the unofficial start to earnings season, with JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Goldman Sachs (GS), and Morgan Stanley (MS) broadly besting Wall Street’s earnings forecasts. But price action was mixed following the results, with financials names also broadly pressured by calls from the White House for a one-year 10% cap on credit card rates, leading the sector near the bottom of the leaderboard on the week.

International Equities: European stocks traded mixed over the last five days, but that didn't stop the regional STOXX 600 Index from posting its fifth straight weekly gain after hitting multiple all-time highs. Energy shares led the region, lifted by geopolitical jitters around Iran lifting oil prices, while geographically, the U.K. outperformed and France lagged on the latest bout of political uncertainty. Prime Minister Lecornu was reportedly mulling bypassing parliament on the 2026 budget as approval remains elusive, before surviving two no-confidence votes over the European Union-Mercosur trade agreement. Simultaneously, Germany ended virtually flat despite annual gross domestic product returning to growth after two years of stagnation.

Major Asian equity markets also advanced with South Korea’s Kospi Index leading the charge on the back of tech enthusiasm as well as reports the Korea Exchange is considering adding pre-and post-market trading. Although, Japanese shares took the spotlight with both the Topix and Nikkei scoring multiple records on reports that Prime Minister Takaichi may call a snap election in the coming weeks to aid her pro-stimulus efforts. Both Japanese benchmarks posted 5%+ gains despite late-week profit taking. Meanwhile, regulatory actions dominated focus in China, leading stocks modestly lower as authorities raised margin lending ratios and moved to limit high-frequency trading techniques in efforts to rein in potential market froth. Hong Kong ended lower, while Taiwan’s weekly advance was supported by TSM’s strong quarterly report.

Fixed Income, Currency, and Commodity Markets

Fixed Income: Core bonds, measured by the Bloomberg Aggregate Index, traded slightly higher over the last five days. Coming into the week, the “loss of Fed independence” narrative resurfaced after the Department of Justice subpoenaed Fed Chair Jerome Powell. However, market reaction continues to reflect very little concern about any meaningful threat to independence. In fact, markets moved in the opposite direction of what you would expect if investors were worried: the Treasury curve flattened, inflation expectations fell, and the Treasury successfully priced $119 billion in auctions that were very well received — particularly notable given January auctions are typically weak. Additionally, Fed rate‑cut expectations have declined, with markets now pricing in fewer than two cuts in 2026. We’ll continue to monitor signs of compromised Fed independence, but so far markets are exhibiting very few indications of concern.

While U.S. corporate bond spreads have tightened to secular lows, global credit spreads are also at their narrowest levels since 2007. Companies issued roughly $435 billion in bonds during the first half of January — a record for the period and more than one‑third above last year’s pace, according to Bloomberg. All‑in yields remain elevated relative to the past decade, prompting continued demand from yield‑focused buyers, such as pension and insurance funds. With the Milliman 100 Pension Funding Ratio Index at its highest level since 2005, pensions are likely to continue de‑risking and adding to fixed‑income allocations — supporting tight credit spreads. Given valuation concerns, we remain underweight corporate credit in tactical models.

Munis, based on the Bloomberg Municipal Bond Index, are off to their best start since 2023 and are outperforming most other taxable markets. January reinvestment flows are more muted this year, with an estimated $37.6 billion in principal and interest returning to investors versus $42.8 billion in January 2025, per Bloomberg. Still, the seasonal reinvestment tailwind remains a positive driver of early‑year muni performance.

Commodities and Currencies: The broader commodities complex traded higher this week, measured by a healthy rise in the Bloomberg Commodities Index. West Texas Intermediate (WTI) crude oil prices oscillated around the week-to-date flat line before jumping Friday on escalating protests in Iran, the fourth-largest OPEC+ producer, and signs of strength in the U.S. economy via a drop in the unemployment rate. Broad geopolitical uncertainty was also bullish for prices this week, although last weekend’s developments in Venezuela are not expected to move the needle much for oil prices outside of some potential support due to Chinese buyers searching for alternatives to discounted Venezuelan barrels. In metals, gold picked up where it left off in 2025, posting a strong gain with the yellow metal underpinned by geopolitical risks and as China’s central bank extending its monthly buying streak to 14. Silver prices rose sharply. Elsewhere, the U.S. dollar posted back-to-back weekly gains.

Economic Weekly Roundup

Inflation Behaving Enough, Balance of Risks Tilt Toward Labor Market. After last month’s dubious calculations, especially on housing, the latest Consumer Price Index (CPI) report is overall an encouraging one for investors.

• The monthly run rate for inflation is still a bit too hot. We need to consistently see rates of 0.1 and 0.2 before we can say things are back to normal.

• Due to the lapse in government appropriations, the collections for October and November were suspect.

• Several categories such as appliances, used vehicles, and vehicle repair services showed price declines, keeping things bifurcated between goods and services.

• Core services ex-housing inflation (Super core) is set to soften in the coming months. In December, annual super core inflation was 2.76%, off the highs of 4.8% in mid-2024.

In the near term, inflation will likely run hotter than policy makers would like, so we expect the Fed to pause this month and possibly in March. However, by the time the Committee convenes in April and June, conditions will likely warrant another cut in rates. For now, the balance of risks tilt toward the weakening labor market. Hence, investors should brace for weaker payrolls and rising unemployment. Our forecasts suggest unemployment reaches 4.6% by the end of this quarter.

The Week Ahead

The following economic data is slated for the week ahead, but some U.S. government data releases are slated for intermittent release before month-end due to the recent shutdown.  

• Monday: Martin Luther King, Jr. Day holiday, no economic releases scheduled

• Tuesday: ADP Weekly Employment Change (Jan 3), Philadelphia Fed Non-Manufacturing Activity (Jan)

• Wednesday: MBA Mortgage Applications (Jan 16), Building Permits (Nov preliminary), Leading Index (Dec), Construction Spending (Sep and Oct), Pending Home Sales (Dec)

• Thursday: GDP (3Q third reading), Personal Consumption (3Q third reading), Initial Jobless Claims (Jan 17), Continuing Claims (Jan 10), Personal Income (Oct and Nov), Personal Spending (Nov), Headline and Core PCE Price Index (Nov), Kansas City Fed Manufacturing Activity (Jan)

• Friday: S&P Global U.S. Manufacturing, Services, and Composite PMIs (Jan preliminary), University of Michigan Consumer Sentiment Report (Jan final), Kansas City Fed Services Activity (Jan), Bloomberg U.S. Economic Survey (Jan)

IMPORTANT DISCLOSURES

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.

Indexes are unmanaged and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

This material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Unless otherwise stated LPL Financial and the third party persons and firms mentioned are not affiliates of each other and make no representation with respect to each other. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.

Asset Class Disclosures –

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.

Bonds are subject to market and interest rate risk if sold prior to maturity.

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High yield/junk bonds (grade BB or below) are below investment grade securities, and are subject to higher interest rate, credit, and liquidity risks than those graded BBB and above. They generally should be part of a diversified portfolio for sophisticated investors.

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The fast price swings of commodities will result in significant volatility in an investor's holdings.

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